Archive for the ‘fha mortgage loans’ Category

FHA loans below 580 credit score

Wednesday, August 20th, 2008

If you have a credit score below a 580 it might be extremely hard to get a FHA loan in this current lending market. But there are other options when it comes to getting government loan. Even though FHA will insure loans below a 580 credit score the secondary market that buys and sells mortgage paper has set the stage as to what will be bought and sold in this market.

When loans are bought and sold in the secondary market, investors watch a particular borrower’s performance. If they notice a particular borrower is not performing well on the secondary market they pull the plug on financing that type of risky borrower. So it’s essentially like watching your own stock portfolios performance. If that particular portfolio of yours is not doing well you stop investing your money in that stock. Mortgage loans work the same way.

Over the last 6 to 7 years FHA loans were being written for all types of borrowers including borrowers below a 580 credit score. Until now there was never a credit score requirement for FHA loans. Most banks are requiring a middle credit score of 580. There are exceptions to this rule. Some banks will allow a FHA loan to go through with a credit score below a 580 if the bank or mortgage company gets an automated approval. An automated approval is a piece of software that banks use that either says “yes” or “no”. Let’s assume you have a credit score of 578 and your loan file is ran through this software and it says ‘yes”, as long as that particular lender will allow a credit score below a 578 with a automated approval you are good to go.

Some banks have internal rules for loans they will approve as well. So just because you have a credit score below a 580 does not mean all hope is lost for an approval.

If you have a credit score below a 580 here are some factors that could possibly help to get an automated approval.
• Savings in the bank
• 401k, usually $25,000 or more really helps
• Money for down payment
• Low income to debt ratios

These are some key factors that could possibly get you an automated approval with low credit scores.

If you have recently been denied for a mortgage loan, get a recent copy of your free credit report and start working on your credit. The higher your credit scores the better terms you will get anyways. Bad credit does not go away; it just lingers over your head like a dark cloud. What ever your situation is we can help you get in the right direction.

About the Author: Mike Clover is the owner of is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Are we currently in a “Buyers Market” Really??

Sunday, August 17th, 2008

With all the talk about us being in a buyers market currently, one might wonder where all the buyers are at. You can look around the country as see that tons of neighborhoods are plagued with homes for sale by individual sellers and banks also. So what exactly is a buyers market?

This market can be applied to the old rule of “supply and demand.” When the supply is low the price increases, but when the supply is high the cost decreases for that particular product. This is the market we are in now, where the amount of homes for sale out way the number of buyers. “Hence, a “buyers market.” The terminology can be a bit deceiving, but that is exactly what we are in. There are lots of homes for sale and very little buyers in this current market.

You might be asking where are all the buyers and the answer to that will be in 2009. This is the year where the first time buyers market comes back into action. The reason the first time buyers market disappeared was because of the cost of homes. The cost of homes increased at such an alarming rate around the US that it squeezed the first time buyers out of the game. With home prices falling around the country now it is more affordable for this market to pick back up where it left off.

There are a couple of concerns that worry the housing market and that is inflation and financing. Current interest rates are in the mid to upper 6 range, and if inflation continues to be problem rates will increase after the first of the year. Also the financing arenas have tightened up and now will require money down to get financing in place. So this could be a possible issue going into 2009.

My best advice would be to mange your credit report, and if you are not aware what is on your credit report pull a copy of your free credit report today. You should also save your money for down payment; FHA will require 3.5% investment on any loan financed after October 1st of 2008.

With all the banking scandals and bad loans underwritten, you can count on financing being a lot tougher now. So be better prepared so you will not have issues getting a loan in this current lending market.

Housing and Economic Recovery Act of 2008 Q & A

Tuesday, August 5th, 2008

Q: How will the law help struggling homeowners keep their homes?
A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property’s current value.

Q: When will the program begin?
A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.

Q: Who is eligible?
A: To be eligible to participate in this program, a borrower must:
• Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.
• Have a monthly mortgage payment greater than at least 31 percent of the borrower’s total monthly income, as of March 1, 2008.
• Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.
• Not have been convicted of fraud.

Q: How can a homeowner access this new program?
A: Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender. The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program. If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30-year fixed rate loans.

Q: Are lenders required to participate in this program?
A: No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

Q: How does this law help neighborhoods that have been hit by the foreclosure crisis?
A: The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market.

Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?
A: No. It is narrowly tailored to keep families in their homes. For example:
• Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
• Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.
• In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.
• Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

Q: Will this law reward families who bought homes they could not afford?
A: Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices.
To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders. It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.

Q: How will this law make it more affordable to own a home?
A: There are a number of provisions that will make homeownership more affordable:
• Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).
• Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.
• Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state’s residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.
• Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).

Q: Does the law provide help to those who still cannot afford to own a home?
A: Yes. The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis. For example:
• The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.
• In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.

Source: is your on-line resource for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness


Friday, August 1st, 2008

The President has signed into law legislation that will allow HUD’s Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA’s existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.

Homeowners May Already Be Eligible For Assistance

Families should not wait to seek mortgage relief. Right now, homeowners can determine if they are already eligible for mortgage assistance through FHASecure, FHA’s existing refinancing program. They can obtain information through either of the following options:

1. Contact a local, HUD-approved housing counseling agency at;

2. Contact the HOPE NOW Alliance at 1-888-995-HOPE

Sustainable, Affordability Homeownership

Hope for Homeowners maintains FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

• Their mortgage must have originated on or before January 1, 2008;

• Their mortgage debt-to-income must be at least 31 percent;

• They cannot afford their current loan;

• They did not intentionally miss mortgage payments; and

• They do not own second homes.

Features of FHA-insured loans under the new program include:

• 30-year, fixed rate mortgage;

• Maximum 90 percent loan-to-value ratio;

• No prepayment penalties;

• $550,440 maximum mortgage amount;

• Extinguishment of any subordinate liens; and

• New home appraisals from FHA-approved appraisers.

HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.

Voluntary Lender Participation

FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure’s recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.

Market Stability and Liquidity

By continuing to slow the rate of foreclosures, this program will support FHA’s existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.


FHA will insure up to $300 billion in new loans. Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.

Program Timeline

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.

Information from Direct link here

FHA down payment assistance gone now.

Wednesday, July 30th, 2008

Over the years FHA has allowed Charity programs such as Home Down Payment Gift Foundation and others provide gifts from the seller. FHA requires that the buyer make a 3% investment in the purchase of the home. So if the buyer is buying a house around $150,000 they would be required to have an investment of $4500 dollars. With the 3 rd party charitable companies this allowed the seller to gift this requirement in a couple of faucets. The buyer could roll the cost into the note, or the seller could just pay it. When it came down to it, this program was just a red tape way of the buyer getting out of the FHA 3% investment requirement. HUD was claiming that homes that were foreclosing 20% were FHA loans that participated in Down Payment Assistance.

The problem with this program was if the home the buyer was purchasing had any equity it was absorbed up in the down payment assistance cost. Typically the buyer had to roll the cost into the note in order for the seller to participate. Essentially this program caused equity problems down the road.

The great situation about this program was it allowed low income families into to homes with little or now money out of pocket. You could get into a home with typically $500 out of pocket. This program helped thousands of families realize the dream of home ownership.

With the new bill that was passed today, the FHA buyer is now required to have 3.5% of there own money to buy a home.

Along with all the tightening up on credit scores and credit reports, now you will required to save to get a mortgage. This is the way it was prior to the late 90’s.

So my advice like always is to save your money and pay all your bills on-time.

Denied for a FHA loan because of Credit Score.

Wednesday, July 23rd, 2008

Getting denied for a mortgage can be humiliating but there is life afterwards. If your credit score is too low because of the current restrictions in the lending industry, I can tell you what you need to do. In this article I will give some tips in regards to better preparing yourself for a mortgage when you credit report may not look too good. With FHA being the most attractive loan in this market, here are some key points lenders are looking for.

• 580 middle credit score
• 12 months clean credit report history
• No foreclosures during the last 3 years
• No Chapter 7 bankruptcies during the last 2 years.
• Must have 2 year work history
• Must have provable income with either two years w2’s or two years tax returns with provable income on Schedule C of tax return.
• Must meet max FHA loan limits in your area. Go here.
• Underwriters look at 24 month credit report history with most infuses on the last 12 months. So make sure your credit report does not look like you have had total disregard for your obligations.
• Good 12 month rental history
• 3 lines of good credit reporting on your credit report for the last 12 months. Alternate lines of credit will work. Example: Letter stating you have been on time with any of your utility bills, car insurance, internet bill, etc…….. for the last 12 months as well.
• Save at least 3% of the amount of house you are buying.

These are some key points to getting a FHA mortgage loan in today’s market. If you credit scores are low, here are some key tips to increase your credit score.

• Make sure you have at least 3 lines of credit reporting on your credit report. These lines of credit should be at least 2 credit cards, and maybe a car note.
• Keep your credit balances below 30% of allowed credit limit
• Don’t be late on anything
• Remove any information that has expired, or is inaccurate.

If you follow this simple process you will be buying a house before you know it. If you don’t know what is on your free credit score report find out today !

About the Author: Mike Clover is the owner of is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.